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What Is an IRA?


What Is an IRA?
© Rangely García / Money
Money-101-Whats-an-IRA
An IRA, or individual retirement account, is an investment tool that allows you to grow cash on a tax-deferred basis until the money is withdrawn. The Internal Revenue Service created IRAs as another way to contribute to your retirement other than a 401(k).
What You Should Know:
There are certain exceptions that allow the early withdrawal of your IRA contributions penalty-free.
Generally, however, withdrawing earnings before the age of 59 ½ is subject to a 10% tax penalty.
You can own more than one type of IRA.
Under the CARES Act, you can withdraw up to $100,000 from your Roth or traditional IRA penalty-free in 2020 if you’re under 59 ½ and have been affected by COVID-19. ....

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